Morgan Stanley says PagerDuty stock is 'too cheap to ignore'; Shares gain after earnings

November 30, 2023 6:12 PM EST
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(Updated - December 1, 2023 7:35 AM EST)

PagerDuty (NYSE: PD) shares rose more than 5% in early Friday trade following the reported Q3 results.

EPS of $0.20 came in better than the consensus estimate of $0.14.

Revenue grew 15.4% year-over-year to $108.7 million, above the consensus estimate of $107.7M. Annual recurring revenue grew 13% year-over-year to $438.9M. Customers with annual recurring revenue over $100,000 grew 10% to 778, compared to 710 in the year-ago period.

“Momentum and innovation within the PagerDuty Operations Cloud continued in the quarter with new AI enhancements and the acquisition of Jeli in November to address our customers’ biggest operational challenges,” said CEO Jennifer Tejada.

For Q4/24, the company expects EPS in the range of $0.14-$0.15, compared to the consensus of $0.13, and revenue in the range of $109.5-$111.5M, compared to the consensus of $110.4M.

For the full year, the company sees EPS at $0.72-$0.73, compared to the consensus estimate of $0.64, and revenue at $429.0-$431.0M, compared to the consensus estimate of $428.44M.

"Growth remains under pressure, as indicated by: 1) another billings miss, 2) Q4 revenue guide of 9-10% YoY growth, 3) further deteriorating NRR, with Q4 guide of 106% following 110% in Q3, and 4) a decline in total customer count along with weak >$100K customer net new adds," Morgan Stanley analyst Keith Weiss said.

"We think growth is unlikely to rebound until after the Q4 renewal cycle, but at16X CY25 FCF we view the stock as too cheap to ignore."

By Davit Kirakosyan

Additional reporting by Senad Karaahmetovic

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